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Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since July 17, 2008) Contents
Performance
* An average of managed accounts, net after all commissions and fees. Click here for more performance data. Click here for information on managed accounts.
* Buy prices shown are net after commissions and fees. Today, Monday, August 18, 2008, I bought SPWR, first for client accounts, then for my personal accounts. SunPower Corp. designs and manufactures silicon solar cells, which generate electricity from sunlight. Here's why I bought this stock: + News: We learned last Thursday, after the close, that PG&E will buy electricity produced by a 250-megawatt photovoltaic farm to be built by a subsidiary of SunPower in California. + A "true surprise"*: For four weeks prior to the news, the stock was trading in a sideways pattern. Then, last Friday, the stock jumped 18% to $92.52 on heavy volume. * "True surprise" is my term to describe a company news item that ignites heavy buying and that was not preceded by a short-term run-up in the stock price (i.e. not preceded by rumor). + Breakout: The price movement on Friday represents a breakout from a 9-week trading range to a new 3-month high. + Volume spike: Friday's volume was almost four times the stock's average trading volume. + I think today's weakness -- the stock is giving back some of Friday's big gain -- represents a buying opportunity. + Excellent recent sales growth. Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +259%, +201%, +92%, and, most recently, for the quarter ended June 30, +120% to $382.8 million. + Excellent recent earnings-per-share growth. Here are the quarterly EPS figures for the last eight quarters:
Sep 07 vs Sep 06: 33c vs 16c Dec 07 vs Dec 06: 39c vs 18c Mar 08 vs Mar 07: 39c vs 29c Jun 08 vs Jun 07: 61c vs 25c + Strong and rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2008 is $2.32, revised upward from $2.17 90 days ago (and up from 2007 actual earnings of $1.26); and the consensus estimate for 2009 is $3.64, revised upward from $3.46 90 days ago. + Valuation: At 25 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 40%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings-per-share at least 2c above estimates in each of the past six quarters. I chose to buy the stock in spite of the following negative factors: - There may be resistance in the $95 to $100 area, corresponding to price peaks set in April and May. - The company's industry group ("Energy - Other") is ranked #8 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling just slightly over recent weeks and months. - The stock's 200-day moving average is falling, very slightly, indicating a long-term downtrend. -KD, Monday, August 18, 2008 Model Portfolio
* Buy prices shown are net after commissions and fees. ** Current prices are at least 20 minutes old. Welcome to The Deen's ListTM, an e-mail stock newsletter from Deen Capital Management, Inc. My intention is to inform you as quickly as is practical regarding my stock market moves. When I buy or sell a stock, first I take care of client accounts, then I buy/sell for my personal account(s), and then, third, I send out this newsletter. Your feedback is welcome. Send e-mail to deenslist@deencapital.com. To subscribe or unsubscribe, include the word "subscribe" or "unsubscribe" in the Subject line. This newsletter is free to managed account clients. For a limited time, it is also free to all interested parties. Your personal information, including your e-mail address, will be held in strict confidence by Deen Capital Management, Inc. We will not share it with or sell it to others. All stocks discussed in The Deen's ListTM involve a high degree of risk. It should not be assumed that any stock discussed in The Deen's ListTM or purchased by Deen Capital Management, Inc. will be profitable. Past performance is not necessarily indicative of future results. The information contained herein has been compiled from sources deemed to be reliable; however, we are not responsible for its accuracy or completeness.
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